Abzena plc (AIM: ABZA, ‘Abzena’ or the ‘Group’), a life sciences group providing services and technologies enabling the development and manufacture of biopharmaceutical products, announces a trading update for the period to 14 September 2017, ahead of its AGM being held at 10am today at the Babraham Research Campus.

Revenues for each of the Group’s service lines during the current financial year to date has been below the Board’s expectations. As a result, the Group expects revenue for the first half of the year to not be significantly higher than the revenue reported for the six months to 30 September 2016, with a corresponding impact on the Group’s expected loss. The Group’s slower than expected start for the period can be attributed to lower volumes in certain areas of the business, a small number of large projects that are taking longer to complete than expected, and certain other projects being delayed until the second half of the year.

With good order cover and a high engagement level for new business, the Board expects revenue for the second half to be substantially stronger than the first half, but it does not expect the business to recover the entire shortfall to the Board’s expectations for the year as a whole. The Board, therefore, expects revenue for the full year to be materially lower than previously expected, with consequential impact on reported loss. Notwithstanding this slow start to the year, the Board remains optimistic that the Group’s long term prospects remains strong.

As described previously, due to the long-term nature of certain research and biomanufacturing service agreements entered into by the Group, revenue recognised under these contracts is based on management estimates of the stage of their completion. The performance of the services under these agreements is subject to scientific uncertainty as well as being dependent on the performance of inter-related activities by the customer and/or third parties. The uncertainties relating to these estimates and the performance of the contracts can lead to material uncertainty in the revenue to be recognised for any service project prior to completion.

The Board remains committed to the growth strategy outlined in the Group’s announcement of 5 April 2017 and reports that progress has been made in adding physical and scientific capacity in order to enable to Group to grow and react to its clients’ demands. As at 31 August, the Group held a robust cash balance of £18.8 million reflecting slightly slower-than-expected investment in its manufacturing capacity.

The investment programme at the Group’s Bristol (USA) facility establishing the GMP bioconjugation and scale-up chemistry capacity is progressing and is expected to be operational in the first quarter of 2018 to fulfil anticipated customer demand.

The first stirred tank bioreactors, with capacity up to 500 L, are on track to be installed on schedule in the fourth calendar quarter 2017 at the Group’s San Diego (USA) biomanufacturing facility.

Investment in the San Diego manufacturing facility has been delayed while the Board evaluates options for consolidation of its biologic process development and manufacturing operations to a new state of the art facility in the San Diego area. This would entail consolidation of all the current operations from the existing Torrey Pines and Rehco Road facilities with an aim to become operational in the first half of 2019.

Following completion of Bioverativ’s acquisition of True North Therapeutics, Bioverativ has disclosed its plans for the two parallel global Phase III pivotal studies of ‘Abzena Inside’ product BIVV009 (formerly TNT009) in 60 cold agglutinin disease patients. These studies are expected to initiate before the end of the year. A further Phase I study in patients with chronic immune thrombocytopenia has been initiated.

John Burt, CEO of Abzena, said:

“The slow start to this financial year arises from a combination of factors that Abzena’s management has recognised and is addressing. The Board anticipates improved performance in the second half as the conversion of new business contracts accelerates and is confident in longer-term growth prospects. The business remains committed to its path towards scale and sustainability across its biology, chemistry and manufacturing service lines.”

This announcement is released by Abzena plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (“MAR”), encompassing information relating to the Group’s trading performance described herein, and is disclosed in accordance with the Company’s obligations under Article 17 of MAR.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by John Burt, Chief Executive Officer.

Abzena (AIM: ABZA) provides proprietary technologies and complementary services to enable the development and manufacture of biopharmaceutical products.

The term ‘ABZENA Inside’ is used by Abzena to describe products that have been created using its proprietary technologies and are being developed by its partners, and include Composite Human Antibodies™ and ThioBridge™ Antibody Drug Conjugates (ADCs). Abzena has the potential to earn future licence fees, milestone payments and/or royalties on ‘ABZENA Inside’ products.

Abzena offers the following services and technologies across its principal sites in Cambridge (UK), San Diego, California (USA) and Bristol, Pennsylvania (USA):